Indiana American Water Seeks Recovery for Investment of More Than $542 Million in Infrastructure Upgrades

Dateline City:

GREENWOOD, Ind.

GREENWOOD, Ind.--(BUSINESS WIRE)--Indiana American Water today filed a petition with the Indiana Utility
Regulatory Commission (IURC) to adjust its rates for water service in
the communities it serves across the state.

Indiana American Water’s ongoing infrastructure investments are the
primary driver behind the request. The company is including more than
$542 million of water infrastructure investments in its request. The
investments are necessary to maintain and enhance service, water
quality, system reliability, and fire protection capabilities for
customers while keeping the cost of water service for most households
their most affordable utility bill at about a penny per gallon.

The company last filed for new rates through a general rate filing in
January 2014 and received an order from the IURC in January 2015.

“Indiana American Water has made significant investments in aging
infrastructure and its treatment and distribution facilities to ensure
service reliability, water quality and fire protection for the more than
1.3 million people who depend on us every day,” said Indiana American
Water President Deborah Dewey. “We are proud of our record of success in
providing affordable water. These investments are critical to the
public’s health and safety and the economic health of the communities we
serve and will also contribute to the creation of nearly 9,000 jobs
across the state.

“We have also worked hard to hold our operating and maintenance expenses
relatively flat by implementing efficiencies and leveraging technology
and innovation throughout the workplace,” said Dewey. “Our O&M expenses
have risen at a rate below the inflation rate over the last decade. Our
successes represent more than $10 million of savings for our customers
over what our expenses would have been if allowed to grow with inflation.

“At the same time,” said Dewey, “we have been able to maintain
top-quartile customer satisfaction and efficiency levels, enhance our
water quality and environmental compliance record, reduce water loss in
our distribution system, and significantly improve safety for our
employees by reducing and improving our OSHA recordable incident rate, a
measure of workplace health and safety, by 77 percent since our last
rate filing.”

Major projects in the rate request include:

Significant system upgrades at three water treatment facilities
located in Kokomo, Richmond and Muncie to meet more stringent water
quality regulations associated with the Environmental Protection
Agency’s Long Term 2 Enhanced Surface Water Treatment Rule. These
projects include replacing and upgrading aging and obsolete treatment
facilities and equipment and, among other things, adding ultraviolet
disinfection to the existing treatment process. When used to treat
drinking water, UV disinfection provides an additional layer of
protection against chlorine-resistant pathogens and microorganisms
that could be present in surface water sources.

Building a new water treatment facility in Noblesville, one of the
company’s fastest growing service areas.

Replacing or upgrading more than a dozen wells, several pumping
stations, water filters, large diameter water mains, and other
critical facilities serving customers in service areas throughout the
state.

Replacing and/or retiring from service nearly 6,700 lead service lines.

Building a solar energy project in Newburgh that generates enough
electricity to power the company’s water treatment facilities there.

In addition to these major projects, Indiana American Water is including
the replacement of nearly 36 miles of aging water mains in this request.

Nationally, much of the nation’s critical water infrastructure is aging
and is well past its useful life. The American Society of Civil
Engineers’ (ASCE) latest Report Card for America’s Infrastructure,
issued every four years since 2001, earlier this year gave the nation’s
water systems a D grade, and wastewater systems a D+ grade. This remains
in line with the last few reports, and heightens the sense of urgency to
take actions that will turn around the condition of the nation’s water
and wastewater infrastructure.

A 2016 study by the Indiana Finance Authority echoed the ASCE’s
recommendations for significant investment in water infrastructure. The
report evaluated Indiana’s water infrastructure and estimated more than
$2.3 billion in infrastructure needs for drinking water systems across
the state, and found that an additional $815 million is needed annually
to maintain the systems into the future.

A breakdown of water systems can result in water disruptions,
impediments to emergency response, and damage to other types of
infrastructure. The price tag for the critical upkeep and replacement of
the nation’s outdated water systems is at least $1 trillion over the
next 25 years, according to estimates by the American Water Works
Association.

Indiana American Water’s rates are based on the true costs of providing
water service as reviewed by the IURC. No rates will change until the
IURC completes a comprehensive review of the request and determines it
is reasonable and justified. By statute, the IURC is required to return
an order regarding the company’s rate request within 300 days of the
filing.

The company is proposing a phased approach to implementing the new rates
that includes an increase of total revenues of 8.22 percent in July
2019, and a second increase of 8.57 percent in July 2020. Public
hearings and opportunities for public comment are part of the process,
under the direction of the IURC.

If approved as requested, the typical residential customer bill would
increase approximately $5.60 per month or 18 cents per day from the
August 1, 2018 rate. The monthly bill for most Indiana American Water
customers using 4,000 gallons of water per month would increase by 16
percent when fully implemented in July 2020, after having just decreased
on August 1, 2018, by 4.4 percent because of the federal Tax Cuts and
Jobs Act of 2017.

About Indiana American Water

Indiana American Water, a subsidiary of American Water (NYSE: AWK), is
the largest investor-owned water utility in the state, providing
high-quality and reliable water and/or wastewater services to
approximately 1.3 million people. With a history dating back to 1886,
American Water is the largest and most geographically diverse U.S.
publicly traded water and wastewater utility company. The company
employs more than 7,100 dedicated professionals who provide regulated
and market-based drinking water, wastewater and other related services
to over 14 million people in 45 states and Ontario, Canada. American
Water provides safe, clean, affordable and reliable water services to
our customers to make sure we keep their lives flowing. For more
information, visit amwater.com
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